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tv   Treasury Secretary Jack Lew on U.S. Economic Leadership  CSPAN  April 11, 2016 8:30am-9:31am EDT

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prize for their video on gender wage inequity in the workplace. and then our bus stopped in los angeles for a ceremony for third prize winner jerry sun before heading to palo alto and rockland, california, to present winners in those areas are -- with awards. c-span thanks cox, time warner cable and comcast for their help in coordinating visits in the community. every day this month be sure to watch one of the top 21 entries at 6:50 a.m. eastern before "washington with journal with." >> shortly we'll hear remarks from u.s. treasury secretary jacob lew, he's being introduced now. secretary lew expected to comment on the success of u.s. leadership of the global economic system over the past 70 years. this is just about to get underway, it's hosted by the council on foreign relations. >> shows that his involvement in these questions and the
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interaction between economics and state craft is rather extensive. so i'm going to welcome secretary lew up to the podium, and he's going to speak for a bit, and then we're going to have a conversation. thank you. >> thanks very much, sebastian, for that introduction and for your with leadership at the council. this is a remarkable institution with a long history of belek chul influence -- intellectual influence on america's foreign policy and, as always, it's an honor to be here today. america be's leadership in the global economy is something we all care deeply abt, and i want to thank gideon and his foreign affairs team for publishing my essay on this topic. the piece opens with a story about the difficulty of getting imf reform through congress. and i asks why was it so hard? why was it is so hard and did it take five years to win approval at the end of last year?
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after all, the imf has been a symbol of u.s. leadership since its birth at the end of world war ii. and along with the world bank and the world trade organization, it's provided the underlying architecture of a global economic system that's helped produce remarkable gains over the past 70 plus years. american leadership was essential to the creation of that system and the progress that it yielded. even though it supported the well being of our citizens and has helped the united states advance our values and our foreign policy objectives, america's global economic leadership has not always been popular here at home. in the case of imf quota reform, it took five years to convince congress to act, a delay that led many in the international community to question america's leadership position in the be global economy. the ultimate passage of imf reform was pivotal, but it was just one of many important steps needed to sustain our economic leadership and adapt it to the challenges of our time. we know that the global
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landscape of the next century will be very different than that of the postwar era. and if we want it to work for the american people, we need to embrace new mares on the global economic -- players on the global economic stage and make sure they meet the standards we created and that we have a strong say in any new standards. the worst possible outcome would be to step away from our leadership role and let others fill in behind us. making the case for global engagement is a responsibility we all share. and we must make the choices necessary to insure both the future of the international architecture we built and america's position in it. over the last year, the obama administration has made significant progress advancing u.s. leadership in the global economy. we worked to secure imf reform, trade promotion authority and the reauthorization of the export-import bank. we reached agreement with our international partners on the trans-pacific partnership, a
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landmark climate agreement, the iran nuclear deal and a stepped-up strategy to confront terrorist financing. of but to insure the benefits of our global role, that those benefits remain available in future generations, we have more work ahead of us. since its establishment in 1944, the bretton woods system of cooperation has evolved and endured by providing a foundation for mutual economic gain that could not be achieved by individual countries alone. since 1950 real per capita income worldwide has quadrupled, raising living standards and expanding access to education. clear rules for global economic relations create opportunities and incentives to innovate, invest and work; the critical drivers of economic progress. but a system of mutual responsibility does not automatically enforce itself. it requires responsible american leadership. it also requires constant improvement to raise standards
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and create better mechanisms to insure that countries keep their commitments, refrain from unfair competitive behavior and cooperate to confront new challenges. the rules-based system was a major reason that the global financial crisis never turned into a second great depression. the united states and other nations were able to coordinate efforts through the g20 and the imf to avoid the downward spiral of protectionism and predatory macroeconomic policies that characterized previous eras. the world's major chis -- the -- economies, the united states, the eurozone and china -- mobilized financial assistance to vulnerable parts of the global system. we've built on that cooperation in recent years to advance important u.s. goals including the imf's response to fiscal stress caused by the ebola epidemic in 2014 and its support for ukraine following russia's aggression in chi -- crimea. the scale and speed in both
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instances would not have been possible if the united states had to act alone or to stitch together donor contributions. the simple fact is that international institutions amplify u.s. influence on the global stage. we've also worked closely to implement financial sanctions that show how this same global financial architecture can be used to threaten peace and security. the iran agreement is a direct result of the financial pressure imposed by an unprecedented global coalition. and we have and continue to work closely with our allies to impose costs on russia for its actions in ukraine and on entities that are abetting north korea's nuclear violations. but the benefits of international coordination and our international standing cannot be taken for granted, and we must take the necessary steps to preserve and strengthen our position. responsible and sustainable u.s. leadership in the global economic system begins at home. and we have to lead by example
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as we did by bouncing back from the financial cry is sis that threatened america's place in the global economy. the u.s. economy has now produced the long streak of uninterrupted job growth in american history. between 2009 and 2015, the budget deficit has declined from nearly 10% of gdp to 2.5%. and improved financial regulation has produced a better capitalized and more stable financial system. yet along the way political brinksmanship led some to question america's capacity to meet this moment of leadership. the threat of government shutdowns and default heightened global anxieties. and washington's inability to reach a consensus on domestic priorities such as rebuilding aging infrastructure and reforming the broken business tax code, priorities with bipartisan support, creates unnecessary risks to america's future economic strength. recent advances including multiyear budget targets and the
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reauthorization of the export-import bank have demonstrated that we have the capacity to work together to make important progress, but much more work remains. beyond our borders the world's economic challenges will not end with the current administration, nor will the ongoing agenda for u.s. leadership. and there are a number of priorities that we must continue to press. first, we must work work with our partners to further modernize the imf, allowing it to intensify scrutiny of exchange rates and shortfalls in global aggregate demand. because more information means better policy cooperation, and more efficient football markets, the imf should continue to promote greater transparency when it comes to economic data especially as it relates to foreign reserves. second, we must work with our partners to make the world bank more efficient and effective. these institutions need to have the resources and policy expertise to help countries
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promote sustainable development and address state fragility, forced migration, natural disasters and disease epidemics. they must also be be able to mobilize resources that cut carbon emissions and build societies resilient to climate change. third, we must help modernize the global trading system by pushing for innovative features in new trade agreements. tpp, for example, includes strengthened labor and environmental provisions, robust protections for services and controls on the behavior of state-owned enterprises to insure fair competition. under the agreement member have also pledged to avoid manipulating exchange rates. these high standards need to be the model for future agreements. fourth, to prevent a repeat of the financial crisis, we must continue to lead efforts to reform the international financial regulatory system. u.s. leadership in this area has already resulted in more rigorous capital standards for banks, greater transparency in
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the derivatives market and stronger tools for managing the failure of financial institutions. with of to the critical standard-setting reforms in place, the focus must shift to implementation and close attention to emerging threats. fifth, we must continue to combat terrorist financing, corruption, money laundering and other financial crimes. the treasury is strengthening its anti-money laundering and counterterrorist financial rules at home working through the financial action task force to improve enforcement global hi and partnering with countries to combat terrorist financing specifically against isil. because we must keep up with innovation in the privacy sector and by our adversaries, regulators must update their regimes while insuring regulations do not impede legitimate provision of financial services especially to the underserved. finally, we're committed to bidding on the -- building on the progress that we've made and cooperating with partners on key
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priorities such as facilitating investment, promoting financial inclusion combating money laundering and terrorist financing. as the two largest economies, the united states and china also have a unique responsibility to work together to advance shared prosperity, maintain a constructive global economic order and make progress on critical challenges like climate change. this year we'll hold the seventh u.s./china strategic and economic dialogue which is a platform that has strengthened recommendations between our two countries and provided a forum for discussing important priorities like china's shift toward consumption-led growth and greater transparency and predictability in its policy making. while the progress of the last year has helped to advance this important agenda, we cannot take our global role for granted, and we must always think about how our choices will affect our leadership in the future. with vision and foresight previous generations of
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americans have provided a foundation on which to advance our values and build a prosperous future for the united states and other countries. our task now is to strengthen that architecture and adapt it to new challenges. if we come together and accomplish this, we'll not only support today's prosperity, we'll also insure that the next generation of americans inmeters an even -- inherits an even stronger platform for navigating tomorrow's economic land scape. thank you very much. [applause] >> great. so we have a bit more than 45 minutes, and we're going to divide that between conversation up here, and then we're going to go to the members. there's a lot of talent i can see in the room, so i do want to hear from people. but i thought i'd start by just, you know, in a slightly cheeky way questioning the premise. you lay out this view that the bretton woods institutions embed u.s. values, expand western
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influence, and i think this is the council, and most people are going to agree with that for the most part. but you could also observe that the central feature of the bretton woods architecture when it was adopted in 1944 was actually a fixed exchange rate regime. and that was probably the most important single part of it, and it was dumped by richard nixon unceremoniously in 1971. and then the world moved on and we found that actually floating exchange rates for large parts of the economy were good. and so i want to ask you to look forward and ask sort of a question about the sort of central theme of your essay which is to say either bits of the financial architecture that we shouldn't necessarily support, that might be be around in ten years. can you think of any that you do not think of as indispensable? >> sebastian, i think that the key is to think of the international architecture as an evolving, adapting set of
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institutions. the world at the end of world war ii looked so different than it does today. the role of the united states was so different than it is today. and it wasn't good. it wasn't good that the rest of the world had lost its manufacturing capacity, that there was no other hard currency that had any even promise of being an alternative to the dollar. and the system that evolved provided a foundation between the 1940s if the 1970s -- and the 1970s to see a period of growth that has led to not just economic growth, but geopolitical stability. some of the political developments in the '70s, '80s and '90s show that when you move towards a more market-oriented system, when you're sharing a set of values, political reforms tend to follow. i think as we go forward the thick -- thing that we have to keep in mind is that the world isn't going to look in 10, 20 or 30 years exactly as it looks today.
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from a u.s. perspective, we need to make sure that we have a role in those institutions to help govern how they change as they go along. we can't look at it as being completely frozen in time or others will just decide that they're going to group together in a different set of organizations where they make different rules. i think the thing about the imf, the world bank are that they're institutions that are very inclusive. there's a very strong u.s. role that we've earned. and going forward, i think these institutions have to be looking at the challenge of the future. you asked about the imf, but let me kind of shift and give an answer perhaps a little bit more about the world bank. you know, we have over the last year seen the world bank play a very important role in the discussions on climate change. you know, we've seen the development of lending facilities that are designed to deal with challenges of the
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future which is governmental and public/private partnerships to invest in the kinds of things that will lead to a cleaner environment. at the imf if you look at the period between 2008 and now, it has played an enormously significant role both in stabilizing the post-financial crisis environment and also in responding to the crisis. i mentioned in my remarks ebola and ukraine. we don't know what those challenges in the future will be. i don't think anyone predicted ebola, you know with, even a month before it became an international crisis. what we know is we need to have flexible international bodies to go to congress to get funding to deal with something in the short term like ebola is a challenge. >> let's take both of those, the the world bank and imf, is since you've raised both of them as
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key institutions of the order created in 1944. so in terms of the world bank, i think it's certainly true that the government system on the board has neither the disadvantages of the u.n. security council -- which is way too narrow for a world in which other powers have risen -- nor the disadvantage of the u.n. general assembly, which is way too democratic, frankly. so that strikes me as an incontestable point. but the tools of the world bank's lending feel to me as if this evolution that you're mentioning might be fed rated somewhat. so, for example, the main lending window which lends, you know, interest rates that cover the world bank's costs so that submarket, they're not giveaway. you know, the premise was a world in which the clients did not have access to global capital markets. that premise is out of the
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window. they do have access to private capital. the classic answer would be there are certain things like public goods where you want more lending than the market would deliver for those things because they're global public goods, and single countries don't have an interest in creating enough of them. but as i understand it, the idrb's interest rates don't differentiate. they tonight give you a cheaper interest rate if you're borrowing-- [inaudible] isn't that a clear case where -- >> and i think if you look at the discussions that we had just last year at addis ababa at the funding for development conference, it kind of illustrates your point of being kind of in between the security council and general assembly. there were very significant debates about how much world bank resource should be put into
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climate. you know, there was a debate about whether it was competing with more traditional forms of lending later, whether it should be all additive. and i think it was resolved in a way that was really quite constructive, where the world bank became a major partner in making resources available to deal with what is one of the most pressing public goods of our generation dealing with investing in a more energy-efficient, less carbon intensive -- >> but right now there is a surge just reported in ibrd lending which is driven by the budget gaps in countries like nigeria which have had resource crashes and where the private markets are being less accommodative in lending for general budget expenditures. so a large portion of what the bank does is kind of substituting, complementing, competing, however you want to see it, with private capital markets. it's not creating global public -- >> i think it's a mistake to
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think any of these institutions is dealing with one challenge. dealing with maintaining basic financial stability in a country is certainly core to what the imf is even though the imf does many things beyond that. the world bank has traditional hi helped to shore up systems which meet the standards that are et by entities like -- set by entities like the imf to be on a sustainable path. i think having multiple points of access to make sure that you avoid the destabilizing consequences of, you know, having either cyclical or price shock effects that lead to economic and political destabilization is very important. it's not that you choose between doing climate change or the other. the question is how do you strike the right balance. i think that one of the things that the world bank has done over last few years is looked at how to manage its resources
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creatively to gain a bit of reach through better management of its financial capabilities to be in more places. that's a good thing. if you look at the countries that are on the cusp of kind of shifting from developing to developed countries, they tend to still be places where you find a lot of poverty. so it's not as if once your overall economy reaches the next level the benefits of that are necessarily as broadly shared as needs to be. >> but if the government of a middle income country wants to reduce poverty, you know, let's take china or india, it can borrow commercially to do projects which are focused on poverty reduction. having the bank there, the world bank there to be an additional source -- either the government wants to do these projects, or it doesn't. >> i think that there is a
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period in that transition when the government wanting to do it and the ability to do it are not totally matched up. and that's where i think having international financial institutions, this is not concessional financing. i mean, i think that we have to maintain the principle that below market rate lending is restricted to the poorest countries and, you know, that is something that comes under pressure on a regular lay sis. >> let me switch a little bit -- >> if i can -- >> yeah, sure. >> i think it's also important to develop new instruments. we're seeing now in refugee crises that there are, there are geopolitical situations that create surges of need. and there aren't necessarily the tools in place to deal with where those needs show up in a timely way. and one of the discussions that's underway now is how to make sure that you have a
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facility that can ten in -- that can step in in a case like a refugee crisis where in one sense it's a global problem, but in another sense it has a very local dimension because people end up in a concentrated place or set of places. i think that's a an important conversation for the 21st century. we're seeing right now the challenge of dealing with that, and that's something that institutions like the world bank are set up to think through. we're doing it now in a way that's adapting old tools for a new challenge. and that's why this idea of adaptation is so key. you have to be nimble enough to deal with the problems you face today and are likely to face in the future, not always looking backwards. >> so on the subject of financial crisis management, your essay and your remarks both draw attention to the imf's role after 2008. but i think probably it's fair to argue that bilateral swaps between the federal reserve and
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other economies that were in desperate need of dollars were bigger in aggregate and more decisive. and that is a p trend that ain't going away, because the sheer volume of cross-border claims has grown so much that even an expanded imf with more resources is going to have trouble being big enough to deal with what happens to south korea when suddenly there's a massive flight to safety in the u.s. and dollars flow back into the u.s. and then you have to have the fed recycling them. so as you think about that, in the next big financial crisis globally, i mean, the imf will be there to deal with medium-sized things like ukraine. but in a bigger sense, big crises, isn't it really a case of central banks dealing with each other? >> well, i'll leave the question of fed p swap lines to the fed which has the authority to make
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those decisions. but i think if you look at the financial crisis and the response to it, the imf played a critical role. it was part of country plans in a number of critical instances where if you had not stabilized those economies, we would have seen a new bottom that was far worse than the bottom we ended up hitting. there was a sense that a there was somewhere to go which psychologically had a very important effect. and i think if you look at the role of the united states, i don't think it is a defensible notion that the united states is going to respond to every global crisis on its own unilaterally. while the ukraine example may be a medium-sized country, look at the numbers that were involved. i mean, a $17 billion imf program. we've done three $1 billion loan
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guarantees which in scoring terms are less than a billion dollars in budget exposure. the leverage that we got by being part of a larger effort, you know, is just the difference between making a difference and not. you crane's economy -- ukraine's economy turned from negative to neutral to maybe positive 2359er than anyone -- faster than anyone thought, and our loan guarantees alone wouldn't have been enough to accomplish that. i think one of the things that's happened since the financial crisis is that the imf has developed new tools. the flexible credit lines are being used in a different way and more effectively. they're, with quota reform we have recapitalized the imf, taken the money and put it in the main fund itself. so i think right now the imf has considerable resources. we do have to ask the question always what would be the consequence of the next crisis. you don't have the luxury of knowing the precise contours of
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a crisis until it's upon you which is why you have to have the tools in place but also the adaptability. look what happened after the financial crisis. the new arrangement to borrow was funded rather quickly to put in the imf the facility that could deal with that crisis. if you had to create an imf out of whole cloth, you couldn't have put that in place to quickly. and i don't believe that any one country, not even the united states, could have had that amount of firepower. >> so you make in your essay a case and a persuasive one that notwithstanding the government's advantage that the fund and the bank begin with, quite a reform is being constructive because you're allowing emerging nations to have a larger voice and stake in the international system. so i'm wondering if you would apply the same logic to the question of global reserve currencies. so right now you have the dollar very dominant, you have the
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chinese explicitly saying they don't like that and they would prefer to internationalize the -- [inaudible] and make it a rival or at least another reserve currency. you have various others expressing frustration with the dominance of the dollar, some of it uninformed, but it's a sentiment that's definitely out there. would it be in the u.s.' national interests if more global funding, including by the private sector, took place in the form of issuing -- [inaudible] debt instead of dollar debt? >> obviously, it's the marketplace that decides these questions fundamentally. and i think it is a fair statement that at the moment there is really no likely competitor to take the place of the united states and the dollar. the reason i raise the question in the essay is that we can't just think about the next year or two, we have to think in decades, 10 years, 20 years, 30 years. and anyone sitting in a discussion like this in the
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1940s or '50s wouldn't have predicted a world that looks exactly the way it does today. and i think that we have to look at the role of the dollar both in terms of the global economy and what it means in terms of giving the united states an extraordinary amount of power and authority in the world and treat that as a, an asset to be protected. and i raised some issues of things that, you know, that are potential threats. if we look like we're stepping back from the international economic leadership role, that invites others to fill a void. if we use tools like sanctions in a way that overdoes it in terms of unilateralism and doesn't maintain the kind of unity that we've had both in the case of iran sanctions and north korea sanctions, you know, that's a challenge. we always have to maintain the ability of the u.s. to act uke laterally in our own -- unilaterally in our own national interests. but we have to do it in a way
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that's mindful of the fact that we have something that gives us power, leverage and economic strength, and that's something we also immediate to keep an eye on protecting -- need to keep an eye on protecting. and i think you need to look at the current global economic situation, and, you know, probably you'd have to say today it will be a longer period of time that we have than you would have said maybe five years ago, because the united states has recovered from the great recession in a way that really demonstrates the resilience of the u.s. economy. and notwithstanding the noise of our political process, the ability of our political system to respond in a timely manner. ..
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>> so it's an are >> so it's an area of common interest potentially, but potentially also conflict. >> your answer is provoking, what ask one more question and then i will, to the audience. your essay does this good job of highlighting the dilemma because of the position of the u.s. dollar, gives one the opportunity to exercise sanction, power that future presidents will be glad to have because it's short of war.
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so that is all stipulated and point taken. there's a balance between use of sanctions, not overuse. you don't want to use it too much. but i'm thinking about the different dilemma which is, namely, whoever, the issue of the reserve currency is issuing safe assets that will protect value during a crisis. so people around the world are going to want that safe acid test insurance. they will come and by lots of u.s. dollar debt because it safe and it becomes easy, this will almost by definition issue too much dollar debt. and as a result these cycles were a debt of euros becomes a problem that threatens the very simple the u.s. has been creating for most of the time. and the way one consequence of
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that position is a constant inflow of capital into the u.s. which makes the dollar stronger which creates deficit which creates global imbalances which then you would like the imf to go -- right? some the things that trouble us into international order, excess u.s. indebtedness, global imbalances and so forth do have that origin in an extreme alliance on the dollar globally. hence, my question. would it be better to encourage, you can imagine it would encourage private actors to use other capital markets more. you could make it more restrictive, harder for corporate, from asia to come issued u.s. dollar bonds. >> i think the u.s. financial markets have the leadership role they have in the world because
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of all of the things that make the united states the united states. it's our political stability. it's our resilience. it's the depth and liquidity of our market, particularly our treasury market. those are all good things. i don't want to change that. actually i want to protect that. actually one of the main points that i am making. when it comes to fiscal policy we ought not take our ability to borrow infinitely as license to borrow infinitely. i've had two tours of the office of management and budget. during one of them we ran a balanced budget into surplus. during the second we dug our way out of every deep hole that we got into in the intervening years. we need to look on the horizon. we've made great progress in this administration reducing the deficit by three quarters, stabilizing the debt, and creating a window when we now have time to do with the longer-term fiscal challenges on
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a stable foundation. that's something that's going to be a challenge that has to be undertaken a new, but don't think our ability to borrow infinitely ought to be viewed as a justification for ignoring that over the long-term maintaining stable fiscal policy is very important to our national strength. we've achieved a great deal to repair the damage that was done both by policies and by recession. but going forward it's going to be responsibility for a new team to take a stable economy and look at period beyond the horizon. >> is not just a government debt. >> i understand. private, and we saw a period where, frankly, we were saying inadequate access to get in this country. it's only in the last few years that we have seen businesses and
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individuals have the kind of better access to credit that they should appear a thing families have improve their balance sheet. businesses are sitting on a great deal of capital right now. so i think the current practices, if anything, are on the recovering heart of the curve. where it goes be on the is a question. but we are a long way from the kind of easy borrowing that we saw in the decade before the financial crisis. i think the challenge we have is how do you make sure that you don't land to individuals and firms that are not credit worthy, just a coast they want to borrow. on the other hand, how do we make sure that individuals and firms that are credit worthy have access to the credit they need, both for the family needs and to invest particularly and small and medium-sized enterprises? we are not seeing as much investment as i'd like to see in
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some of these areas. i wish, we've tried to ease the credit box just because we think for mortgage lending purposes or if you have a very solid credit history you ought to have access to a mortgage. that's different than the subprime loan. same thing with a small business or an entrepreneur who wants to extend of this is commented to arc completely delinked because one of the ways the entrepreneurs typically have access to credit was through mortgage products. we still have work to do but that's moving in the right direction. i think we are a ways away from having to worry about kind of an overhang of loose credit. >> let's get right to the audience. >> thank you very much. barbara slavin from the atlantic council were i run a program on iran. i'm going to read this question because i'm not a banker. but i spoke to one who is.
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we are seeing a lot of problems with sanctions relief for every. is part of the difficult because they have dollar assets now in banks in china and india that they're having trouble accessing and using, moving? or is it because banks find it difficult to do transactions without some reference to the dollar. and do what you need to reinstitute at least a limited u-turn so that iran can avail itself of its own money which is sitting in primarily asian banks? >> we have been very clear that nuclear sanctions on iran that limited access to iran's reserves and financial institutions were lifted when iran complied with its nuclear related obligations under the joint comprehensive plan of action. we have been clear in going around the world making that
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point, both government-to-government, and to financial institutions. iran has many challenges in doing business here some of them have to do with iran's own business practices. some of them have to do with iran's other activities outside of the nuclear arena where they continue to engage in supporting terrorism, regional destabilization, missile testing that is violating norms, and human rights problems that they have in their own country. so there are still sanctions on iran in those areas, while the nuclear sanctions have been lifted. i think that we have to be clear, iran complied with the nuclear agreement. therefore, the nuclear sanctions are lifted. i think that is a process that is becoming more and more clear, and we will keep our part of the bargain there. of the u.s. financial system is not open to iran, and that is not something that is going to
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change. so the challenge is going to be out of work through an international financial system that is complicated where there is a lot of attention paid to what u.s. law requires. i think our obligation is to be clear, which i've tried very hard to you at our team has tried very hard to do. if you look at what makes a sanctions regime work, sanctions regime works if in order to get relief from the sanction a government changes its policy. so the government of iran changed its policy. that's why we lifted the sanctions were nuclear sanctions. the government of iran has not changed his behavior and all those other areas, and their still our other sanctions in place. navigating through that will be a challenge but it's one where i think clarity will help. >> we are not proposing that the u-turn be changed.
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>> behind you. >> thank you, sebastian. beacon policies to get advisors. mr. secretary, given the premise that global leadership begins are at home i'd like to ask a second about the puerto rican debt crisis. i know your treasured part has been working closely with the house natural resources committee on legislatilegislati on but it sounds like we might get a new bill as early as today. what we are hearing is that republicans in congress to get on board will probably push for a week or restructuring authority they have collective action causes, plus the litigation state. and if you combine that with a debt moratorium that the island itself has been preparing to is that something treasury can get behind because there's still an ongoing process. people were working through the weekend on it and i don't
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believe it's completed just. what we've been very clear about is that the only way for puerto rico to resolve the situation it faces is for there to be a comprehensive restructuring of the debt. at along with that there needs to be a very strong oversight board to make sure that puerto rico continues on a path, gets only path and stays on the path that can be sustained. the are a lot of details, but when you get down to the bottom line, the question to ask is does that structuring authority where. past work or it will not be accessible. it cannot be so deep a label on but in the marketplace doesn't work. there's still some open issues. we have had a very good working relationship on a bipartisan basis working through many, many technical issues, but they're still a number of are difficult issues that are open that if result in the right way will lead to a bipartisan support. but if not result in the right way just will not work, it will not support something that
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doesn't work. >> i do have a question but if it's okay i would yield to the doctor. >> okay. fine. >> mr. secretary, you have been very clear about the connection between u.s. economic leadership and the trade and international organizations. but u.s. economic leadership is a very abstract concept and it's pretty clear to people in this room, it's not clear to the general public and, indeed, it seems to conflict with the people who are cheering let's make america great again. so my basic question is, how do you establish a connection between u.s. economic leadership in the world and a strong u.s. economy which is clearly what everybody wants?
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>> it's obviously a very important question. we know that jobs are supported by trade a better than jobs that are not supported by trade. we know that a world where markets are close to the united states is going to lead to a bus will perform at u.s. economy. that's not necessarily broadly embraced now. i think, frankly, one of the things we have to do is be more clear about what are the standards that are going to be in place in countries like the ttp countries that sign on. what does it mean to extend higher labor standards in a country like vietnam? is a somewhat abstract questions but if you have high labor standards in the united states and low labor standards in other countries, it means the other countries are always going to lower costs and be able to out compete in. as the other countries raise their standards and meet our
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kinds of labor concerns and are kind of environmental concerns and our kind of business practice concerns, the playing field he comes more level for the youth to compete better. i actually think one of the challenge we have is how to make sure things like trade adjustment assistance don't just get public attention at the moment when there's an effort to pass the trade promotion authority bill or a trade agreement. there has to be attention on those issues in the intervening years. we can do have challenges getting a system to focus on these things except at the moment when we are trying to get approval for trade legislation. i think the fact we could get a majority of congress to support trade promotion authority just a few months ago is quite significant. i think all of us who believe that the benefit is economic leadership are profound, both in economic and geopolitical terms, apple work to do to make the case to people who have
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legitimate worries about an economy that has for decades now not necessarily provided the kind of opportunity to middle-class workers and their families that they want to have and have a right to expect. that's not all because of trade. i think trade has become one of the things that's easy to point to, but between globalization and technological change and income concentration, we have seen an awful lot of change in our country in the last 25 years. and i think if we address those root issues by having better education, more skills for the economy of the future, infrastructure that will make it easier to get to the jobs you need, if you don't live to the jobs that are available, the burden of getting the job is
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harder if you can't travel there because there is no mass transit or the road take two hours instead of 35, 40 minutes, it becomes a real hurdle to your own personal mobility. we have a lot of domestic things we can do to concentrate on building our economy in a way that gives people real confidence in their own economic future. i actually think most of the kind of thing such as described are the kinds of things which you can have bipartisan consensus on. if it was in the context of an overall fiscal approach where you have resources to address problems that have bipartisan support to address. the challenge on infrastructure now isn't that people don't want better roads and airports and better airports. it have to pay for it. it really comes back as you and i both know who wears the money come from. and hopefully the work of the last several years has moved us back towards a more mainstream conversation of those issues but we saw at the end of last year,
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and i certainly hope that continues. >> what strikes me about the question is that she is correct that parts of the primary debate, skepticism about globalization. it's also true in europe that animosity towards the supernatural economic institutions is at an all-time high. i mean, very commission of the european union is in doubt. but actually the interesting thing is that we are having this conversation in the sense i can remember some of your predecessors who would be making a speech essentially saying that if bretton woods institution have allowed themselves to become irrelevant bordering on archaic, either scrapped or read a change in of asking a question, you have taken the opposite position wholeheartedly supporting them and supporting international system.
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i am therefore in the position of prodding you to defend that position. i think there is an interesting flip in some sense. >> i can point you to things in the last year that kind of partially answered alice's question to answer yours. we made enormous progress in the g20 this year on base erosion and profit shifting the that's closing the tax loopholes that allowed the legal shifting of money to low or no tax environment. we have seen just in this last week the outrage of people around the world because those kinds of opportunities exist. we in the united states have taken a leadership role in doing things to try make it more transparent who the real owners are putting a place tax information sharing agreements that make it easier or tax authorities to cooperate. at getting the g20 two a great in this area, we made more progress in the last year than in the last 20 years on that issue.
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on things like the financial action task force come working on a global basis to try and put real barriers in the way of anyone trying to use the international financial system for illicit or malign the purposes. have a lot more work to do but we had a meeting at the u.n. security council in peace and where the was a unanimous resolution on the subject and it was the united states and russia jointly sponsoring it. we have work to do. it's not that we have achieved everything we need to. nor that anyone sitting here in my roll will ever be able to say we have achieved everything. but you have to adapt to the challenges of the future. if we could address this issue of taxes becoming stateless income, income that never gets taxed, i think would help address some of the international sentiment that the system doesn't seem fair pics i think the fact that we worked on
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that is very important. we didn't have to demonstrated by making real progress. -- we have to demonstrate it by making real progress. >> rachel with "congressional quarterly." i follow on to barbara's question early. there's been a couple bills filed in congress to address the u-turn concern to make it illegal. what are your thoughts on those measures given that you just said there are no plans to allow limited u-turns at this point? >> what we have said, the president said about 10 days ago, is that we work on an international basis to make sure that financial institutions and other governments understand what the lifting of the nuclear sanctions mean, after provide the guidance that's necessary for iran to get access to resources into transaction, that it has a right to with a nuclear sanctions being lifted. that's what we're doing to i'm not going to address hypotheticals in terms of any other actions.
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>> thank you very much. let me ask a question that broadens the earlier question and let you expand a bit on underdeveloped. those of us in the business focus on our hard-won successes, but outside of washington that you do development has broken has probably never been more widespread and not without reason. now when you look back at history and see wave after wave of computing approaches to development have not had an effect. and what is it more effective anything in recent experience with efforts of the chinese party, the congress party in china to lift hundred finance the people out of poverty.
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this pessimism isn't all bad. it's encouraged the private sector to step up with a whole movement of impact investment, but what i'm wondering is, given your understanding of bilateral aid from your predisposition, the state department and your understanding of multilateral efforts given we sit now, are there any deep changes that might break the cycle of development and effectiveness that you see? >> well first, i wouldn't accept the premise that our experience in development has been ineffective. it has not been perfect answer but somethings have worked better than others, but the countries where you seen the biggest rise out of poverty have been very much they countries have been beneficiaries of lending from institutions like the world bank. and in many cases recipients of bilateral aid. i think that, when i was at the state department what i saw when i looked around the world was a
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big challenge of coordinating different streams of development assistance, that in a host country it wasn't always clear what the goals were and who was working with whom. working even within the united states, we tried very hard to coordinate the bilateral and multilateral efforts that we have underway. so that we have maximum advantage. it's something we look at when i was at the state department for the perspective of having responsibility for the bilateral develop and come and where i sit now come largely responsibility for the multilateral development. but look at something like climate change. look at the conference i mentioned, funding for development. i don't think you could've imagined 10 years ago that you would've had a gathering of funding for development conference where three principles came out of this as being equally critical. one was that there's a need for ongoing official development.
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secondly, that there's a need for host government investment in the same priority. and third, that has to be public-private partnership in order to get the full leverage necessary to achieve results. i think that is a very important foundational element to the top 21 a great in paris and it's an important concept as we go forward you can't look at any of these things in isolation to the question is when you put them together to they give you the results you are looking for? i think it's a mistake to think that everything has been a great success but it certainly is a big mistake to think everything has been a big failure. we have to adapt and learn how to take the best of what we've accomplished and build on that for the future. >> thanks. steve, george washington university. in your essay in your remarks
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you highlighted the work of the world bank on climate change. the question of where to ask is about the world bank's role in human rights. recently the u.n. special rapporteur on extreme poverty and human rights criticized the world bank for being a human rights free zone. i want to ask you your reaction to that criticism, and what you think the proper role for human rights in world bank lending is? >> one of the u.s. interests in world bank in recent years has been to make sure that there is a proper focus on the conditions in the countries, both in terms of human rights but also in terms of the impact on the community, the investments that are being made. that is something that we've been pushing with a great deal
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of support from congress. and i think it's something that helps guide the world bank as it moves forward. it is a challenge in many countries to get along the path of progress on economic, political, human rights field goal at the same time. but that's not an excuse for not pushing in the right direction and for having standards of what is acceptable progress. so it's in their where we will continue to press. i don't think that's a fair characterization of the world bank, but again i don't think it's fair to say that in all the countries where the world bank lends, the practices are yet where they need to get. these are countries that are developing countries in every regard in many cases, and empower bilateral programs, we tie aid to progress and would press for those kind of standards and international
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settings as well. >> and last question will go to the lady in the green shirt. >> the financial transparency pollution. thank you for coming to speak with us. a question you alluded to in profit shifting scheme. i guess what i would like to push you on is that there's a sense come when i think of america's economic leadership i think of rule of law, transparency. i think of respect for small and medium enterprise. we talk to my colleagues abroad they have a different picture right now. they see a great place to hide illicit cash with no questions asked. the big scandal about the panama papers was less educated at panama but so many americans didn't need to do in panama because they could do in delaware and in nevada. i would love to hear from you what to say to those critics. >> i think we have a tax system
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that is amongst the best in the world and is a standard that others aspire to in terms of its independence and its reach. we have put in place the ability to see what peoples different income streams are. if it's not subject to tax, that's policy issue, not kind of transparency issue. we are working globally to make sure that the shedding of tax information, you know, the word is now international were because the united states adopted the policy of making it obligatory on all countries to share tax information so that you can't hide. we are not all the way the the the base erosion work we did was
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critically important, but i seem to keep coming back to the meetings. another thing that came up that was quickly important was how weak the systems are internationally in so many countries and how much technical assistance countries need to build the kinds of tax authorities so that you can work with them to make sure those gaps don't develop. we have pledged to double our office of technical assistance support. we worked closely with the imf and other bilateral partners. but we are making real progress. we have more work to do. i think that the idea that there's different rules, depending on kind of where you are in the hierarchy is unacceptable. everyone has to follow the law. and if the laws permit the movement of income to countries

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